NIHONPARKERIZINGCO.,LTD.
FY2020 ended March 31,2020
Financial Results Briefing
May 29, 2020
(Note)Due to the spread of covid-19, the financial results briefing for the year ending March 31, 2020 was canceled. So we have disclosed the only the materials.
NIHONPARKERIZINGCO.,LTD.
Table of contents Overview of FY2020 ended March 31,2020 Business segment and sales composition ratios Consolidated financial highlights Consolidated quarterly trend Consolidated income statement Financial results of business segments by area Variation analysis of operating income Summary of non-operating income Capital investment R&D Consolidated balance sheet Consolidated cash flow
Forecast of FY2021 ended March 31, 2021 Dividend policy and shareholder return Progress of third mid-term management plan Measures against COVID-19 Enhancing the profitability of existing businesses Developing of new products and new markets Supplementary information Consolidated financial highlights Subsidiaries and affiliated companies
2
NIHONPARKERIZINGCO.,LTD.
Chemical38%
Equipment20%
Jobbing38%
Other4%
2020/3
Business segment and sales composition ratios
3
Sales consolidated
119,028million yen
Chemicals
Surface treatment chemicals for adding corrosion resistance, creating a paint base, providing lubrication, cleaning substrates, design features and other various purpose.
Rust proof oil and packaging material Rolling oil and lubricants Electroless plating solution(KANIGEN PLATING) Other products
Equipment
Plant for automotive industries Pretreatment, E-coat equipment for general
industries Powder Coating Equipment(PARKER IONICS) Wet booths and Dry booths
Jobbing
Rust proof coating Salt-Bath Nitriding(ISONITE) Gas carburizing, carbontriding, low temperature
carbonitriding Gas nitrocarburizing Electroless plating process(KANIGEN PLATING) Other various surface treatment
Other Building maintenance Transport of chemical products Manufacture and sale of metal test pieces Manufacture and sale of bolts
NIHONPARKERIZINGCO.,LTD.
Consolidated financial highlights
4
(Unit: million yen)
102,514109,063 109,569
114,840
129,207
119,028
14,850 15,766 16,934 17,984 17,02312,601
17,453 17,921 18,779 20,750 20,13015,723
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
Sales Operating income Ordinary income
NIHONPARKERIZINGCO.,LTD.
Consolidated quarterly trend
5
(Unit: million yen)
28,091
31,896 32,251
36,968
30,696 29,270 28,769
30,291
3,998 4,197 5,002 3,825 3,957 3,652 3,188 1,802
5,066 4,979 5,690 4,393 5,146 4,116 3,903
2,557
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019/3 2020/3
Sales Operating income Ordinary income
NIHONPARKERIZINGCO.,LTD.
Consolidated income statement
6
Overseas sales ratio 34.8%(※Including exports from japan) Foreign currency translation effect:
Sales approx. ▲1,095 million yen, Operating income approx. ▲44 million yen
(Unit: million yen)
2019/3 2020/3 Change % Change
Net Sales 129,207 119,028 ▲10,178 ▲7.9% Decreased in both domestic and overseas.
Operating income 17,023 12,601 ▲4,421 ▲26.0%Decreased due to decrease of sales.Depreciation was increased due to capital investment.
Ordinary income 20,130 15,723 ▲4,406 ▲21.9% Non-operating income 4,096Non-operating expenses 974
Net income attributable to parent company shareholders 11,424 9,449 ▲1,974 ▲17.3% Extraordinary gain 589
Extraordinary loss 752
Net income per share 94.20 yen 78.87 yen - -
Ratio of ordinary income tototal assets 9.2% 7.2% - -
Return on equity(ROE) 8.2% 6.7% - -
The average exchange rate(USD) 110.43 yen 109.05 Yen - -
NIHONPARKERIZINGCO.,LTD.
Financial results of business segments by area
7
(Unit: million yen)Net sales Operating income
2019/3 2020/3 Changes 2019/3 2020/3 ChangesChemicals 48,723 45,920 ▲2,803 8,581 7,546 ▲1,035
Japan 29,894 28,758 ▲1,136 4,646 4,344 ▲302Oversea 17,763 16,095 ▲1,667 3,395 2,648 ▲746Inter-segment 1,065 1,065 0 539 552 13
Equipment 30,975 25,169 ▲5,806 1,125 595 ▲530Japan 15,425 10,849 ▲4,575 444 311 ▲132Oversea 15,088 13,647 ▲1,440 377 ▲54 ▲432Inter-segment 461 671 210 303 338 34
Jobbing 46,074 45,225 ▲848 8,354 7,323 ▲1,031Japan 27,232 26,716 ▲516 5,337 5,188 ▲149Oversea 18,802 18,483 ▲318 2,799 1,934 ▲865Inter-segment 39 26 ▲13 217 200 ▲16
Others 6,315 5,919 ▲396 237 ▲1,123 ▲1,361Adjustments and Eliminations ▲2,881 ▲3,206 ▲324 ▲1,277 ▲1,739 ▲462
Total 129,207 119,028 ▲10,178 17,023 12,601 ▲4,421
Due to the economic downturn caused by the US-China trade problem, consumption tax increase in japan and the spread of COVID-19 in the world, sales and profits decreased in all segments.
(Note) Sales and profit of each segment include internal sales and transfers between segments.
NIHONPARKERIZINGCO.,LTD.
17,023
12,601
▲3,187
+164 ▲45 ▲562 +405 ▲1,198
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2019年3月期 売上高の減少 原材料価格変動
為替の影響 減価償却費 人件費 その他経費 2020年3月期2019/3 2020/3
Variation analysis of operating income
8
+1,167百万円
(Unit: million yen)
ForeignCurrency
Translationeffect Labor
cost Other
Rawmaterial
cost Depreciation
Sales decreased
SG&A expense
NIHONPARKERIZINGCO.,LTD.
Summary of non-operating income
In addition to the interest and dividend income, we recorded the profit from equity method for affiliates in japan and china and technical license fee. As a result, non-operating income was 3,121 million yen.
9
(Unit: million yen)
2019/3 2020/3 Change
Interest income 353 418 +64
Dividend income 660 680 +20
Equity in earnings of affiliates 1,134 1,321 +186
License royalty 463 426 ▲37
Other income 1,145 1,248 +102
Total of non-operating income 3,759 4,096 337
Interest expense 50 38 ▲11
Other expense 601 935 +334
Total of non-operating expense 652 974 +322
Non-operating profit, net 3,106 3,121 +14
NIHONPARKERIZINGCO.,LTD.
Capital investment
10
In the jobbing segment, we implemented a capital investment for the enhancement of heat treatment and rust prevention processing equipment.
Japan 2,429 million yen, US 1,070 million yen, China 1,925 million yen.
(Unit: million yen)
5,168 6,486
5,750
3,663
5,436 5,802
2,228
2,182
1,019
2,898
2,150 1,418
82
202
365 98
123 239
2,541
1,667
798 2,007 827 1,515
10,020 10,539
7,933 8,668 8,536
8,974
0
2,000
4,000
6,000
8,000
10,000
12,000
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
Jobbing Chemicals Equipment Others
4,743 3,714 3,520
4,261 4,977 5,100
5,276 6,825
4,413 4,407 3,559 3,874
10,020 10,539
7,933 8,668 8,536
8,974
0
2,000
4,000
6,000
8,000
10,000
12,000
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
Japan Oversea
By areaBy segment
NIHONPARKERIZINGCO.,LTD.
R&D(1/2)
11
More than 130 professionals work at the central research laboratories. In addition to improvements to the corrosion prevention and tribological characteristics, we have
also been engaged in the development of technology for adding a variety of properties to surfaces including insulation, conductivity, hydrophilicity, water repellence, heat dissipation, and thermal insulation properties, among others.
(Unit: million yen)
2,112 2,181 2,303 2,302
2,154 2,220
0
500
1,000
1,500
2,000
2,500
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
NIHONPARKERIZINGCO.,LTD.
R&D(2/2)
12
Conducting R&D to expand and develop new markets Meeting changing needs such as environmental needs (improvement of durability,
improving performance and energy efficiency, and chrome-free, etc.) In addition to rust prevention, create demand through development of diverse
functions ( insulation, conductivity, hydrophilicity, anti-finger print, design, etc.) Developing technologies for new markets. (aircraft, electronic parts, defense force,
medical parts, etc.)
Enhancing fundamental research Developing products for next generation vehicles and the aircraft market Nonferrous material, adhesive or joining between metal and different materials.
Function Applications
heat radiation ⇔ insulation Heat sink, Engine parts, Roof panel material
electric insulation ⇔ conductive Motor parts, Electromagnetic shielding material, Electrical component
adhesive ⇔ non-stickiness Rubber-resin-metal composite material, Seal material, Laminate material
hydrophilic ⇔ water-repellent, oil repellent Heat exchanger, Antifouling material
low friction ⇔ high friction Power train, Clutch, Slide rail
hardening ⇔ softening Sliding parts, Plastic working parts
stable rust layer ⇔ rust proof coating Weathering steel, Repair of building materials
other Fingerprint-resistant steel sheet
NIHONPARKERIZINGCO.,LTD.
2019/3 2020/3 Change
Current assets 111,687 111,034 ▲653
Fixed assets 107,130 105,739 ▲1,391
Tangible and Intangible assets 63,284 64,966 +1,681
Investments and other assets 43,846 40,773 ▲3,073
Total assets 218,818 216,773 ▲2,044
Current liabilities 37,226 31,384 ▲5,842
Fixed liabilities 14,832 14,441 ▲390
Total liabilities 52,059 45,826 ▲6,232
Total net assets 166,759 170,947 +4,188
Shareholders' equity 131,253 136,183 +4,929
Accumulated other comprehensive profit 9,203 7,051 ▲2,152
Non-controlling interests 26,302 27,713 +1,411
Total liabilities and net assets 218,818 216,773 ▲2,044
Shareholders‘ equity ratio 64.2% 66.1%
※Shareholders‘ equity ratio=(”Total net assets” – “Non-controlling interests”)/Total liabilities and net assets
Consolidated balance sheet
13
(Unit: million yen)Main factor of change
Securities ▲3,367
Cash dividends paid ▲2,649Current profit +9,449
Valuation difference on available-for-sale securities ▲2,174
translation adjustment ▲17
Acquisition +8,974Depreciation ▲6,516
Accounts payables ▲4,083
Shareholders‘ equity ratio is stable.
NIHONPARKERIZINGCO.,LTD.
Consolidated cash flow
2019/3 2020/3Net cash provided by operating activities +17,292 +17,514
Profit before income taxes +19,492 +15,560
Depreciation and amortization +5,992 +6,516
Others ▲8,192 ▲4,561
Net cash used in investing activities ▲10,299 ▲8,732Purchase of property, plant and equipment ▲8,823 ▲9,171
Others ▲1,476 438
Net cash used in financing activities ▲5,663 ▲6,109Cash dividends paid ▲2,966 ▲2,704
Others ▲2,697 ▲3,405
Effect of exchange rate change on cash and cash equivalents ▲753 +109Net increase (decrease) in cash and cash equivalents +576 +2,781Cash and cash equivalents at beginning of the fiscal year 53,149 53,726Cash and cash equivalents at end of the fiscal year 53,726 56,507
14
(Unit: million yen)
Free cash flow (“Operating cash flow”-“Cash flow from investing activities”) is positive.
NIHONPARKERIZINGCO.,LTD.
Forecast for FY2021 ended March 31, 2021
15
(Unit: million yen)
2020/3Actual
2021/3Forecast Change % Change
Net Sales 119,028 - - -
Operating income 12,601 - - -
Ordinary income 15,723 - - -
Net income attributable to parent company shareholders 9,449 - - -
The average exchange rate(USD) 109.05 yen -
At this time, it is difficult to estimate the impact of spread infection of COVID-19, so we can not estimate the forecast. We will promptly disclose the forecast when it becomes possible.
NIHONPARKERIZINGCO.,LTD.
Dividend policy Based on a target payout ratio of 25% on a consolidated basis, we will determine
the amount of dividends after giving sufficient consideration to consolidated achievements, retained earnings required for future business development, etc.
Although sales and profits decreased in FY2020 compared to the previous year, we will increase the dividend to increase returns to our shareholders.
Dividend policy and shareholder return
16
(Note)Dividend for FY2021 ending March 2021 is not decided at this time, it is not be described.
7.50 7.50 10.00 10.00 11.00 11.00
7.50 9.00 10.00 11.00 11.00 13.00
2.00 15.00 16.50
20.00 23.00 22.00
24.00 18.6% 19.8% 20.2%
21.9%23.4%
30.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
0.00
10.00
20.00
30.00
40.00
50.00
60.00
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3
Year-End(Commemorative)
Year-End(Ordinary)
Interim
Payout ratio (Consolidated)
Undecided
NIHONPARKERIZINGCO.,LTD.
Progress of third mid-term management plan
17
Sales and profits decreased in all segments in FY2020.Due to the expansion of COVID-19,
Prolonged recession will be expected.FY2021 forecast is undecided.We will continue to implement key measures.Enhancing the profitability of existing
businessesDeveloping of new products and new
markets
2019/3 2022/3Difference
Actual TargetSales 119,028 133,500 ▲ 14,472
Chemicals 44,854 50,000 ▲ 5,146Equipment 24,497 26,000 ▲ 1,503Jobbing 45,199 51,500 ▲ 6,301Others 4,477 6,000 ▲ 1,523
Operating income 12,601 19,000 ▲ 6,399Ordinary income 15,723 22,000 ▲ 6,277
(Unit: million yen)
102,514109,063 109,569 114,840
129,207119,028
133,500
14,850 15,766 16,934 17,984 17,023 12,601 19,000
17,453 17,921 18,779 20,750 20,13015,723 22,000
17.0% 16.4% 17.1% 18.1%15.6%
13.2%16.5%
14.5% 14.5% 15.5% 15.7%13.2%
10.6%14.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3 2021/3 2022/3
Sales Operating income Ordinary income Ordinary income ratio Operating profit marginTarget
Third mid-term plan
Forecast
is
undecided
NIHONPARKERIZINGCO.,LTD.
Measures against COVID-19
We are implementing following measure; Established general headquarters for planning measures against
COVID-19 to ensure the safety of employees and their families and continue the business of our group.
Developing IT infrastructure to promote telecommuting and online meetings.
Use of satellite offices, staggered working hours and flexible working hours.
Temporarily suspended the operation of the factory. Assuming a prolonged recession, strongly promote cash out
control and cost reduction. Looking ahead to the future after the pandemic of COVID-19, we
are continuing to implement key measures of third mid-term management plan including “Strengthening the profitability of existing businesses" and “Developing of new products and development of new markets".
18
NIHONPARKERIZINGCO.,LTD.
Enhancing the profitability of existing businesses
Strengthen group governance Human resource development Rationalization and reorganization
to enhance the profitability of existing businesses Strengthening of R&D system Reconstruction of manufacturing system Organizational reform Building group common infrastructure Strengthening group collaboration further Change corporate culture and the way of thinking
19
NIHONPARKERIZINGCO.,LTD.
Development of new products and new markets
Healthcare and Medical field
Start selling antibacterial spray and electric scalpel
IoT and Robots
Providing new products using new technologies such as IoT, robots and others.
NIHONPARKERIZINGCO.,LTD.
■Consolidated financial highlights
21
2015/3 2016/3 2017/3 2018/3 2019/3 2020/3
Net Sales 102,514 109,063 109,569 114,840 129,207 119,028
Operating income 14,850 15,766 16,934 17,984 17,023 12,601
Ordinary income 17,453 17,921 18,779 20,750 20,130 15,723
Net income attributable to parent company shareholders 9,975 10,320 12,228 12,721 11,424 9,449
Operating profit margin 14.5% 14.5% 15.5% 15.7% 13.2% 10.6%
Sales ordinary income ratio 17.0% 16.4% 17.1% 18.1% 15.6% 13.2%
Ratio of ordinary incometo total assets 9.9% 9.5% 9.7% 10.0% 9.2% 7.2%
Return on equity(ROE) 9.4% 8.9% 10.2% 9.7% 8.2% 6.7%
Shareholders‘ equity ratio 61.1% 61.5% 62.5% 62.9% 64.2% 66.1%
(Unit: million yen)
NIHONPARKERIZINGCO.,LTD.
■Main sbsidiaries and affiliated companies (As of 31st March 2020)
22
(Korea)■Dae Han Parkerizing Co., Ltd.
(Taiwan)■Chung Jih Metal
Treatment Chemicals, Inc.
(Indonesia)■P.T. Nusantara Parkerizing■P.T. Parker Metal Treatment Indonesia ■P.T. Parker Engineering Indonesia
(Malaysia)■Nihon Parkerizing Malaysia Sdn Bhd
(Thailand)■Thai Parkerizing Co., Ltd.■PET Trading Co., Ltd.■Parker Engineering (Thailand) Co., Ltd.■Kanigen (Thailand) Co., Ltd. & 1 other
(China)■ Parker Surface Technologies (Shanghai) Co., Ltd.■Parker Engineering (Shanghai) Co., Ltd.■Kanigen (Shanghai) Trade Co., Ltd.■Guangzhou Parkerizing Co., Ltd.■Foshan Parker Surface Modification Co., Ltd.■RIZHAO PARKER SURFACE TREATMENT CO.,LTD.□Shenyang Parkerizing Co., Ltd.□Shanghai Parkerizing Co., Ltd.□Wuhan Parkerizing Chemical Co., Ltd.
(Vietnam)■Vietnam Parkerizing Co., Ltd.■Vietnam Parkerizing (Hanoi) Co., Ltd.■Parker Processing Vietnam Co., Ltd.
(India)■Nihon Parkerizing (India) PVT LTD■Parker Engineering (India) PVT LTD
(U.S.)■Parker Trutec Inc.■Parker Trutec MMI Inc.■Parker Engineering America■Delamin Nitriding Salts U.S.
(Mexico)■Parker Trutec Mexicana S.A de C.V.■Parker Eng. De Mexico S.A. de C.V.
(Belgium)■P.I of Europe NV
(The Philippines)■Philippine Parkerizing Inc.
(Japan)■Nihon Parkerizing Co., Ltd.■Parker Engineering Co., Ltd.■Parker Kako Co., Ltd.■Hamamatsu Netsushori Kogyo Co., Ltd.■Komatsu Parkerizing Co., Ltd.■Oita Parkerizing Co., Ltd.■Japan Kanigen Co., Ltd.t
■Kyodo Unso■Ozeki Chemical Industry Co., Ltd.■Hokkaido Parkerizing Co., Ltd.■Kyowa Manufacturing Co., Ltd.■Parker Giken Kogyo Ltd.■Paltec Test Panels Co., Ltd.■Million Chemicals Co., Ltd.
□Parker Corporation□Yuugen Co., Ltd.□Parker Netsushori Kogyo Co., Ltd.□Nagaizumi Parkerizing Co., Ltd.□Green-Techno
■ Nihon Parkerizing and subsidiaries□ Affiliated companies
(U.K.)■Delamin Nitriding Salts
NIHONPARKERIZINGCO.,LTD. 23
The forward-looking statements such as forecast of financial consolidated resultscontained in this document are based on the information currently available to theCompany and certain assumptions which are regarded as legitimate. Actual resultsmay differ from these forecast due to various factors.Significant factors which may affect actual results include but are not limited to;a)state of the economy b)fluctuations in exchange rates c)product competitiveness,d)regulations and e)limits of intellectual property protection.The information in this document is not intended to solicit investment.Please make investment decisions at your own discretion.